It's not unexpected that Apple, in a repeat of last year, would roll out new iPods for the holidays in early September. This time, however, Apple will price their iPods aggressively in order to avoid leaving a door open for the competition, according to Forbes on Wednesday.

"Cheaper iPods would help the Cupertino, Calif., company avoid overlap between its new $299 iPhone 3G and iPod digital media players," wrote Brian Caulfield. "And on Apple's quarterly earnings call last July, Apple Chief Financial Officer Peter Oppenheimer said the company expects its gross margins to fall to 30% for fiscal 2009, down from 35%.

Forbes noted a report from Piper Jaffray's Gene Munster on Tuesday which predicted the iPod touch (8 GB) would be reduced to US$199. Mr. Munster also expects a redesigned iPod nano, rumored to return to the vertical design of the 1G and 2G models.

"Bumping up capacity while tweaking prices has worked before. Sales of Apple's Shuffle surged after the company cut the price for the dinky music players to $69 from $79 last February, while doubling the amount of music the gadgets can hold," Mr. Caulfield noted

The Forbes analysis mirrors the current thinking that Apple will have to make the iPod touch, minus the mobile phone calling feature of the iPhone, less expensive and more attractive to maintain the sales momentum for their premium, flagship iPod, the touch.

With more and more smartphone users having choices for music, the days of the stand-alone MP3 player, except at the very lowest, least profitable price points, may be coming to a close. As a result, Apple will have to migrate those not read for a hefty AT&T iPhone contract to an iPod touch that's more profitable, yet attractively priced, and can shut the door on the competition during the holiday gift giving season.